Global Affairs Canada (“GAC”) has announced it is now accepting applications for the 2025-year tariff rate quotas (the “TRQs”) for most dairy products (including cheese and ice cream), and poultry (including eggs).  Applications opened October 1, 2024, and the deadline to apply is November 15, 2024.

What is a TRQ?

Canada has a number of supply-managed goods – largely agricultural products such as milk, butter, cheese, poultry, eggs, etc.  Imports of these products into Canada are practically prohibited with punitively high tariff rates (i.e., generally over 200%).  However, when negotiating free trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (the “CPTPP”), Canada generally makes market access commitments to its trading partners – agreeing to allow a defined quantity of supply-managed goods to be imported at a lower level of duty.  Canada then establishes TRQs to track and enforce those import limits. 

Under the TRQ system, GAC establishes a specific quantity of an importable product (the “Available Quantity”), and then allocates that Available Quantity through a TRQ, which is granted to eligible applicants annually using a prescribed allocation method.  (For more information, see our prior blog here).

CPTPP Dairy TRQ

As discussed previously in our blog, Canada has allowed a defined quantity of access with respect to imports of supply-managed goods from other member-nations to the CPTPP, which includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam.

Following a successful challenge of its CPTPP Dairy TRQ Regime in 2022, GAC made amendments to its CPTPP Dairy TRQ process, including the removal of all allocation holder pools (i.e., processors will no longer have their own pool of TRQ). Another significant change is that distributors are now eligible to apply under the CPTPP Industrial Cheese TRQ.

The 2025 application form also allows importers to request a quantity for  all CPTPP dairy TRQs.  GAC also increased the further processing end-use requirement for CPTPP Butter TRQ from 80% to 85% of the TRQ volume.  The transfer policy has also been amended to allow two-way transfers under all CPTPP dairy TRQs which creates some flexibility for importers.  GAC also will allow for the return date to be a month later for all CPTPP dairy TRQ.

GAC clarified that these changes only apply to CPTPP dairy, and that there are no changes to dairy TRQs under the World Trade Organization (“WTO”), Canada-European Union Comprehensive Economic and Trade Agreement “(CETA”) and the Canada-United States-Mexico Agreement (“CUSMA/USMCA”).

Takeaways

Importers of dairy and poultry products should ensure to apply for TRQ allocation within the applicable deadline.  While there have been changes to the CPTPP dairy TRQ regime, the system in its current form still generally favours established Canadian businesses over new entrants.  As the TRQ application process can be convoluted, legal assistance can help importers attempt to secure and grow allocation over time.

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